Assuming the free flow of capital across borders, if country A wants to fix its exchange rate with country B, then:
A) country A's inflation rate will have to match country B's.
B) country A's monetary policy must be conducted so the inflation rate in country A matches the inflation rate in country B.
C) country A's monetary policy will not be able to be used to address domestic issues.
D) all of the answers given are correct.
Correct Answer:
Verified
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A)
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A)
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Q8: Purchasing power parity implies:
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